Enterprises need to put data at the heart of business strategy, but it takes more than just technology. CIO uses insights from Clive Humby, the British mathematician who helped create the UK retailer Tesco’s Clubcard loyalty scheme, to explain what organizations can do to forge a data-driven culture.
A data-driven organisation is critical to the success of any modern firm. Although, data in its base form has little use. To be effective, data is like oil; it needs refining to cater to different requirements and drive activity.
The ability to break data down and analyse its key constituents is critical in order for data to add value to an organization’s process. Organizations who can effectively utilise data in their operations are often able to reap the rewards. Firms with data-driven insights are 140% more likely to create sustainable competitive advantage.
‘Data must be broken down, analyzed, for it to have value’ – Clive Humby
Even though data presents huge potential advantages, not all companies are embracing its benefits. Research shows that 69% of large companies are not creating data-driven organizations. The percentage of firms that identify as data-driven had dropped between 2017 and 2019. In 2017, HBR reported that organizations were using less than half of their structured data to make decisions and less than 1% of unstructured being used at all.
To overcome these issues, firms need to engage their culture with data and ensure their employees embrace it as a technology for positive change and something that can enhance their decision-making ability. It is also critical to invest in the right tools that help makes sense of the data.
There are a few key ways for an organization to develop a data-driven culture. It is important to engage stakeholders, develop and refine the sources of data that the firm uses, aggregate data into a ‘single source of truth’, build data models that develop opportunities, improve access to insight and improve data literacy.
69% of large companies such as GM, Ford and American Express had not created a data-driven organization, while over half were not yet treating data as a business asset. In fact, the percentage of firms identifying themselves as data-driven had declined over the past three years, from 37% in 2017 to 31% in 2019.
Insights-driven businesses are growing at an average of more than 30% annually and could earn $1.8 trillion by next year.
NewVantage Partners’ 2019 survey asked executives about the challenges to data-driven business, only 7.5% cited technology as the challenge, while 93% identified people and process issues, including organizational alignment and cultural resistance.